Suppose You Are Deciding Whether or Not to Increase Production

question 78

Multiple Choice

Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $10, but your increase in revenue will be $10. You should

• A)Increase production by at least 1 unit.
• B)Increase production by exactly 1 unit.
• C)Leave production unchanged, profit is maximized where you are.
• D)Redo the math associated with decreasing production because that may result in greater profit.

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Definitions:

Agreement Phase

A stage in negotiations or discussions where all parties involved reach a mutual understanding or commitment.

Coalitions

Coalitions are alliances or partnerships formed between individuals or groups with the aim of achieving specific objectives or addressing common concerns.

Multiparty Negotiations

discussions or bargaining processes involving more than two parties or groups to reach an agreement.

Greater Strength

Refers to the higher level of power or influence one party can have in a negotiation or conflict situation.